Employees could have opportunities to change working locations when they who work in multinational companies. Expectations of employees and employers may be different in these orientations when it comes to the calculation of payments for annual leave. Employers may think that the employment relationship have ended whereas the employees may think that there is a seniority progress.

As a starting point, termination of contract is a precondition in order to annual leave to be turned into payment. In case of a termination of employment contract, regardless the reason; according to the Labor Law No. 4857 Article 59 unpaid annual leaves shall be calculated at the amount of the last payment (gross salary). At this point it is unimportant whether the termination of contract is caused by a just cause or not.

Under Article 59 of the Labor Law numbered 4857 it is stated clearly that the durations that the employee worked at the same employer's one or more establishments shall be considered as a whole while making calculations for the annual leave right. In this situation, employee's services that are provided at the same employer's one or more establishments shall be taken into consideration as the essential durations for having the right for annual leave and annual leave durations are calculated.

Working at the same employer's one or more establishments

Employer could be defined as the creditor of the service performance and orders who also gives introductions to the employee as an authority.  Legal entity itself has the title of employer. Companies that have separate legal personalities and entities shall stand as employers individually and separately. Therefore, employees who work at a group company are not considered the employees' of the group but rather the employee of the one single legal identity in the context of labor law.

Article 54 of Labor Law stated working at "the same employer's one or more establishments" as the criteria. It is clear that different legal personalities are different employers. The rule of inability to merge employment durations that are provided for the independent legal entities connected to the same group company or same holding company is also accepted by the Court of Cassation. But, due to the justification of "long duration of lawsuits" made by the Court of Cassation, in practice, Court of Cassation could find organic bond between these companies and decide that those employers are held responsible together.[1]

Merging Durations

Even though it is clearly stated in Article 54 of Labor Law that the durations in intermittent work shall be merged, in some cases it is not required. In these situations, in the sense of annual leave calculations, seniority starts from the second period of work. Therefore first employment period is not included in the calculation. In order to reset the seniority in intermittent work, termination and elimination of contract is required. If the employment contract is already terminated and eliminated, then the first employment period is not included in the calculation of the duration of leave. Court of Cassation first evaluated that whether the termination and its consequences did occur or not and accordingly, decided whether merging is required or not.

"Eliminating the contract with all its consequences" shall mean, especially for the annual leave payment, to pay all the receivables to the Employee due to the former termination. If the payments for unused annual leaves are made precisely to the employee at the end of the first employment, then it would not be possible to calculate the annual leave days by adding work durations. Therefore, in cases of the former employment relationship being eliminated, the duration that is considered in the indication of the amount for the annual leave shall start again from the beginning.

Working period which are not eliminated by paying or granting permission shall be added to the works that are done at the same employer's one or more establishments.[2]

In order to eliminate the working period, it is required that all of the annual leave days remaining to be used by the employee or payment shall be made in return. It is not considered as elimination if only severance compensation is paid.

  • "If the employee works periodically at the establishment that is owned by the same employer, paying severance pay due to termination is not an obstacle for merging durations."[3]
  • On the other hand, the court, even though the Employer has separated the plaintiff's work into two periods, since severance pay balances are ensured due to the first period's work which is accepted as termination because of retirement, it would not be possible to mention that the first period's work has been eliminated. In this case, plaintiff's work, severance and notice payments and annual leave pay shall be calculated by the total work period which is obtained by summing up two periods of work. [4]
  • It shall be identified whether the employee's each periodic work has ended by the termination of the employment contract or not, and it shall be determined whether the employee's legal rights have been paid or not according to this termination. When it is determined that the employment rights have been paid, it shall be accepted that previous works have ended and it shall be added to the following work durations with regards to compensation calculations.[5]
  • "If employee has been paid as ... due to his unused payments for leave with regards to the previous termination, it may not be possible to calculate it by adding it up to... period's work durations.[6]

Previous Work Being Less Than 1 Year

Even though, as explained above, Court of Cassation requires elimination of the employment, Court of Cassation also suggested that the calculation shall be made by including subsequent works when the employee cannot avail himself to annual leave since previous work was less than 1 year. Since before 1 year of work there would not be any right for annual leave days, it would also not be possible to eliminate the employment. Here, in the decision mentioned below, it can be seen that the Court of Cassation protects employees who work intermittently but less than 1 year.

"Once again, for cases where the employee did not avail himself for the right to leave because of working for less than 1 year, right for annual leave shall be determined by adding to subsequent works that are done at the same employer's one or more establishments."[7]

Period of Limitations and Interest

The Court of Cassation states that the first work period does not get affected by the plea of limitation. According to the Court Of Cassation's clear statement[8]; annual leave is actually a right to rest and previous period does not get affected by the limitations in intermittent works.

A specific payment day is not defined in the Labor Act for the annual leave payments. Payment for annual leave day matures at the date of the termination of contract. However in terms of interest, in order to be charged, it is required for the employer to be put in default by sending a written notice via notary public. Interest could be charged after the notification is delivered.

Payment for annual leave is not included in the wide context of payment and it could not be charged under the highest rate of interest that would be applicable for deposits which is accepted by the Labor Law Article 34. In this respect, legal interest rate shall be charged for payment for the annual leave.


Eventually, as the rule in intermittent works, previous working periods shall be included while determining durations of annual leave days. When it comes to being employed in companies that have establishments in different countries, first thing that shall be taken into consideration is whether these companies could be considered as one/same employer or not. Second it shall be determined that apart from the termination whether the employment contract has been eliminated and whether annual leave payments have been paid or not.

[1] 9th CIVIL CHAMBER of COURT OF CASSATION. 2014/20540 K. 2015/35002 T. 10.12.2015; E. 2015/9-726 K. GENERAL ASSEMBLY OF CIVIL CHAMBERS 2017/24 T. 18.1.2017

[2] 7TH CIVIL CHAMBER OF COURT OF CASSATION E. 2014/20540 K. 2015/35002 T. 10.12.2015; YARGITAY HUKUK GENEL KURULU E. 2015/9-726 K. 2017/24 T. 18.1.2017

[3] 22TH CIVIL CHAMBER OF COURT OF CASSATION E. 2014/35016 K. 2016/6012 T. 1.3.2016

[4]7TH CIVIL CHAMBER OF COURT OF CASSATION E. 2016/10728 K. 2016/13215 T. 14.6.2016

[5] 22TH CIVIL CHAMBER OF COURT OF CASSATION E.2014/9017 K. 2015/22831 T. 1.7.2015

[6] 22TH CIVIL CHAMBER OF COURT OF CASSATION E. 2016/24866 K. 2016/23493 T. 1.12.2016

[7] 22TH CIVIL CHAMBER OF COURT OF CASSATION E. 2017/9163 K. 2017/5545 T. 16.3.2017, 7TH CIVIL CHAMBER OF COURT OF CASSATION E. 2016/10214 K. 2016/17889 T. 31.10.2016;  7TH CIVIL CHAMBER OF COURT OF CASSATION E. 2016/32016 K. 2016/17433 T. 24.10.2016; 7TH CIVIL CHAMBER OF COURT OF CASSATION E. 2016/25798 K. 2016/16257 T. 11.10.2016;

[8] 9TH CIVIL CHAMBER OF COURT OF CASSATION E. 2014/566 K. 2015/12154 T. 26.3.2015


The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.